Obama’s Government Spending Won’t Stimulate The Economy


Obama was out pushing his infrastructure improvement program recently, theoretically trying to create jobs and jumpstart the fractious economy. The benefit of such programs is questionable though.  Granted, there is a great need for repairs to our bridges, highways and rail systems, but does running up huge deficits (read future tax hikes) for these kinds of projects do anything to stimulate the economy?

There are two ways the government can implement the funding of these “shovel-ready projects.”  They can collect taxes from you and then pay once the project is finished, or they can order the project to commence and borrow the money to pay for it.  With our credit crazy system that does not require a balanced budget, you know what they do.  These government funded projects provide a temporary benefit, but at what great price?  Shifting money from one pocket to another doesn’t make one any richer, and neither does collecting taxes only to give the money back.  Granted the infrastructure improvement projects are needed and getting something back for our tax dollar is better than just handing out a welfare check, but don’t be fooled by the claims that government make-work will stimulate the economy.

Let’s look at it like this.  Suppose your son lost his job and moved back home with you.  You can pay him to mow the grass, paint the garage, or whatever.  That gets something done around the house, and is better than just giving him money, but it doesn’t make the family as a whole any richer.  However, if he gets a job at the grocery store and brings home a paycheck, then the entire family is better off.  Taxing the people to pay for government projects is just shuffling family money around.  No wealth is created.  Government projects are no more than taxing you to give the money to your son.  Private sector stimulation, not government programs, will create the needed boost to our economy.

The government seems to have the notion that taxes are their share of our wealth; that they have a right to take what they want from us.  (Kinda of like when Guido comes around to your store each week for his 20% cut for the “protection” he has given.)  And since it is their money, we don’t have a say in how it is to be spent.  They need to get over that idea!  Government has no wealth of its own, so every dime must be taken from private citizens.  Every single dime, regardless of the collection and disbursement method, comes out of your pocket.  The federal government could print more money, but that would devalue the dollars you have, so that would still be taking from you.  To make matters worse, a large portion of every dollar taken from us by the Fed is blown on waste, fraud, and inefficiency, before it is returned.  They tax us a dollar to give us back seventy-five cents, or whatever.  We would be way ahead if they let us keep the money to spend locally.  (Big argument for smaller government, but for another post.)

Different from the family example above, the government is not taxing you to pay your son to mow the grass.  They are borrowing the money from someone else, to be paid back generations from now.  Your son’s children will be paying him when they pay back the loan, a much higher payment, by the way, than what your son gets for his chores.  Your son should be ashamed to take the money, laying this debt on his kids, and you should be ashamed to have allowed this situation to come about as it has.  You should also be outraged by this awkward position our liberal big government politicians have put us in.  Their greedy quest for power has driven them to mortgage the future of our country for generations to come.  They have run up debt we cannot afford.

The eight-hundred-pound gorilla that no one wants to talk about is that our insatiable diet of recurring annual deficits is not sustainable forever.  As it stands right now, our children and grandchildren will be paying off our debt.  At the rate we are going, that burden will be extended many generations into the future.  At some point though, we reach a level where we can no longer pay even the interest.  After that, it snowballs and we have no hope of ever escaping.  We have to default on our loans or declare national bankruptcy.  (Great article at Townhall.com by Howard Rich goes into greater detail.)

So what should the government be doing?  Everything possible to help the son get a good paying job where he can get his own place and take care of his own family, basically the opposite of everything Obama and the Democrats have done.  Acquiring massive debt will not get us out of trouble.  Building wealth in the private sector is what it will take to pull us out.  Then, with your son out of your pocket, and when your business improves, too, you can hire someone to mow your grass and paint your garage.  During tough times, every family knows that it must cut back.  Government finances operate by the same principles as the family budget.  Raising taxes and government stimulus programs are not the way to get through to better times.

Freedom is when we collectively agree to give to the government to pay for common needs and services.  Servitude is when our unbridled government takes from us to pay for programs they have jammed down our throats.

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Comments

  • fahrrad stadler  On November 6, 2010 at 10:02 am

    There is obviously a lot to know about this. I think you made some good points in Features also.
    Keep working ,great job!

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